Indian government bond yields are expected to track U.S. peers higher on Monday after strong economic data last week from the world's largest economy kept interest rate-hike fears alive, and as states announced another heavy borrowing schedule.
The 10-year benchmark 7.26% 2032 bond yield is expected to trade in the 7.40%-7.45% band after closing higher at 7.4181% on Friday, a trader with a private bank said.
The yield rose three basis points last week, after rising an aggregate 12 basis points in the previous two. "Things are looking pretty bleak for the bond market at this juncture, as the 10-year U.S. yield may break the critical 4% handle soon," the trader said. U.S. Treasury prices fell on Friday, after data showed that U.S. consumer spending rebounded sharply in January amid strong income growth. The 10-year yield was trading around 3.95% mark, while the two-year yield jumped over 10 bps to 4.80%.
Consumer spending, which accounts for more than two-thirds
of the U.S. economic activity, jumped 1.8% last month, against
expectations of a 1.3% rise, while the personal consumption
expenditures price index also shot up 0.6% last month, after
gaining 0.2% in December.
Meanwhile, Indian states aim to raise 308.33 billion rupees
($3.72 billion) via the sale of bonds on Tuesday - the highest
level for the current financial year.
The central government has also revised its borrowing calendar for Treasury Bills for the remaining five weeks of this financial year, now borrowing 390 billion rupees through T-Bills every week, as compared to 290 billion rupees previously.
These developments come after New Delhi has completed its
borrowing via dated securities for this financial year. The
government raised 14.21 billion rupees via the sale of bonds in
the current financial year, and aims to garner 15.43 trillion
rupees next year, with the phenomena of demand-supply mismatch
raising its head.
KEY INDICATORS:
** Brent crude futures contract was 0.1% higher at
$83.25 per barrel, after rising 1.2% in the previous session
** 10-year U.S. Treasury yield was at 3.9335% and
the two-year note at 4.8094%
($1 = 82.8973 Indian rupees)
(Reporting by Dharamraj Dhutia; Editing by Nivedita
Bhattacharjee)
